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Former directors face questioning over Carillion’s collapse

The Insolvency Service is to start interviewing former directors of the collapsed government contractor Carillion as it steps up an investigation into one of the biggest corporate failures in recent British history.

Nearly seven months after Carillion entered liquidation, the government agency said it had finished transferring 278 contracts to new suppliers as part of a painstaking process designed to ensure smooth continuity of public services.

Officials are now expected to devote more time to an investigation into why the company failed, including a closer examination of the role played by former directors, who were branded “delusional” by MPs earlier this year.

The service has the power to disqualify people from serving as company directors for up to 15 years if it finds them guilty of misconduct and can pass information to criminal enforcement bodies in the most serious cases.

Earlier this year, the business secretary, Greg Clark, called on the government agency, which has 1,700 staff, to fast-track its investigation.

But while officials are understood to have been in contact with directors, who were accused of “recklessness, hubris and greed” in a report by MPs, they are yet to be interviewed.

The government’s official receiver, Dave Chapman, is expected to start the interview process in the coming weeks following the completion of the transfer of public and private sector contracts.

In a statement, the Insolvency Service said Chapman had “wide-ranging powers to obtain information, material and explanations”.

The inquiry will run alongside two parallel investigations into Carillion’s failure, which is likely to cost the government at least £150m due to the expense of hiring a team from the accountancy company PricewaterhouseCoopers to help manage its liquidation.

The Financial Conduct Authority is looking into allegations of insider trading, while the Financial Reporting Council (FRC) is examining the role played by its auditor, KPMG, and the former finance directors Zafar Khan and Richard Adam.

The Insolvency Service is turning its attention to the directors after completing the “trading phase” of the liquidation, which involved finding new companies to take on contracts for public services such as cleaning hospitals, serving school dinners, and road and rail projects.

A further 429 jobs have been rescued, taking the number saved since Carillion’s collapse to 13,945 – more than three-quarters of the company’s pre-liquidation workforce.

The number of redundancies has reached 2,787, while 1,272 have retired or found work elsewhere, the Insolvency Service said.

A further 240, mainly in Carillion’s former head office in Wolverhampton, have been retained by the Insolvency Service to help wind down its remaining activities.

Chapman said: “Carillion is the largest ever trading liquidation in the UK.

“The continued uninterrupted delivery of essential public service since the company’s collapse in January reflects the significant effort put in by its employees, supported by my team and those employed by the special managers [PwC].”

He said the Insolvency Service was still overseeing the transition of “limited” services to some suppliers and would also work with suppliers who have continued to provide goods and services during the liquidation to make sure they get paid.

“My investigation into the cause of the company’s failure, including the conduct of its directors, is also under way,” he said.

Carillion’s failure in January led to widespread recriminations, with former directors, regulators and the government all facing criticism over a company that managed huge construction projects and provided government services.

Trade War PHOTO

China slams US “blackmailing” as Trump issues new trade threat

US President Donald Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods and Beijing warned it would retaliate, in a rapid escalation of the trade conflict between the world’s two biggest economies.

Trump’s latest move, as Washington fights trade battles on several fronts, was unexpectedly swift and sharp.

It was retaliation, he said, for China’s decision to raise tariffs on $50 billion in US goods, which came after Trump announced similar tariffs on Chinese goods on Friday.

“After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced,” Trump said in a statement on Monday.

The comments sent global stock markets skidding and weakened both the dollar and the Chinese yuan on Tuesday. Shanghai stocks plunged to two-year lows.

China’s commerce ministry said Beijing will fight back with “qualitative” and “quantitative” measures if the United States publishes an additional list of tariffs on Chinese goods.

“Such a practice of extreme pressure and blackmailing deviates from the consensus reached by both sides on multiple occasions,” the ministry said in a statement.

“The United States has initiated a trade war and violated market regulations, and is harming the interests of not just the people of China and the US, but of the world.”

US business groups said members were bracing for a backlash from the Chinese government that would affect all American firms in China, not just in sectors facing tariffs.

Jacob Parker, vice president of China operations at the US-China Business Council in Beijing, said China would undoubtedly “begin looking at other ways to enforce action against U.S companies that are operating in the market.”

Some companies have reported Beijing is meeting with Chinese businesses to discuss shifting contracts for US goods and services to suppliers from Europe or Japan, or to local Chinese firms, Parker said.

Washington and Beijing appeared increasingly headed toward open trade conflict after several rounds of talks failed to resolve US complaints over Chinese industrial policies, lack of market access in China and a $375 billion US trade deficit.

US Trade Representative Robert Lighthizer said his office was preparing the proposed tariffs and they would undergo a similar legal process as previous ones, which were subject to a public comment period, a public hearing and some revisions. He did not say when the new target list would be unveiled.

“As China hawks, like Lighthizer and (Peter) Navarro, appear to have gained power within the Trump administration lately, an all-out trade war now seems more inevitable,” said Yasunari Ueno, chief market analyst at Mizuho Securities in Japan.

Tit-For-Tat

On Friday, Trump said he was pushing ahead with a 25 percent tariff on $50 billion worth of Chinese products, prompting Beijing to respond in kind.

Some of those tariffs will be applied from July 6, while the White House is expected to announce restrictions on investments by Chinese companies in the United States by June 30.

“China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology. Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong,” Trump said.

Trump said if China increases its tariffs again in response to the latest US move, “we will meet that action by pursuing additional tariffs on another $200 billion of goods.”

Trump said he has “an excellent relationship” with Chinese President Xi Jinping and they “will continue working together on many issues.”

But, he said, “the United States will no longer be taken advantage of on trade by China and other countries in the world.”

Cooling Chinese Economy

The intensifying trade row threatens to put more pressure on the already cooling Chinese economy, risking an end to a rare spell of synchronized global expansion and collateral damage for its export-reliant Asian neighbours.

China’s central bank unexpectedly injected 200 billion yuan ($31 billion) in medium-term funds into the banking system on Tuesday in a move analysts said reflected concerns about liquidity but also the potential economic drag from a full-blown trade war.

China imported $129.89 billion of US goods last year, while the US purchased $505.47 billion of Chinese products, according to US data.

Derek Scissors, a China scholar at the American Enterprise Institute, a Washington think tank, said that means China will soon run out of imports of US goods on which to impose retaliatory tariffs.

China was unlikely change its industrial policies in response to the US trade threats, he said. That could take a long and painful trade fight.

“As I’ve said from the beginning, China will back off its industrial plans only when US trade measures are large and lasting enough to threaten the influx of foreign exchange. Not due to announcements,” he said. – Reuters

Cancer PHOTO

Shire sells cancer treatment business for $2.4bn

Pharmaceutical giant Shire is raising $2.4bn (£1.7bn) by selling its cancer treatment unit to France’s Servier.

The sale comes just weeks after Japan’s Takeda Pharmaceutical said it was considering a takeover bid for Shire.

Shire says the sale of the oncology business was initiated in December and is unrelated to the possibility of a takeover bid.

The company said it may also sell other assets that it judges as not central to its business.

“While the oncology business has delivered high growth and profitability, we have concluded that it is not core to Shire’s longer-term strategy,” said Shire’s chief executive Flemming Ornskov.

“We will continue to evaluate our portfolio for opportunities to unlock further value and sharpen our focus on rare disease leadership with selective disposals of non-strategic assets,” he added.

Shire specialises in developing treatments for rare diseases. The company was founded in the UK and still has a large base in Basingstoke, but relocated its corporate headquarters to Dublin in 2008.

Takeda confirms bid interest in Shire

Under UK rules governing takeovers, Takeda has until 25 April to launch a bid for Shire.

It has been reported that Takeda’s boss is meeting some of Shire’s biggest shareholders this week to discuss a possible takeover offer.

Investors will be keen to know how Takeda intends to fund the takeover of Shire which has a bigger market value.

Not-for-profit

France’s Servier is controlled by a not-for-profit foundation and invests all of its profits into drug development.

It also allocates a quarter of its sales to research and development.

Its group president, Olivier Laureau, said the deal will help its ambition to become a leading organisation in cancer treatments and also gives it access to the US market.

Biz PHOTO

China could target broad range of US businesses if trade spat worsens

China could target a broad range of U.S. businesses from agriculture to aircraft, autos, semiconductors and even services if the trade conflict with the United States escalates, the China Daily newspaper said in an editorial on Thursday.

Trade tension has been growing between the world’s top two economies after U.S. President Donald Trump last Friday moved to impose up to $60 billion in tariffs on some Chinese imports, promoting warnings from Beijing it will retaliate with duties of up to $3 billion of U.S. imports even as it urged Washington to “pull back from the brink.”

On Wednesday, Trump’s top trade envoy said he would give China a 60-day window before tariffs on Chinese goods take effect, but added that it would take years to bring the two countries’ trading relationship “to a good place.”

The China Daily on Thursday quoted Chinese Premier Li Keqiang as telling a U.S. Congressional delegation this week that China was open to dialogue but “fully prepared with countermeasures”.

It warned that if the conflict continued to escalate “China could consider taking reciprocal measures against U.S. imports of agricultural products besides soybeans, as well as aircraft, automobiles and semiconductors.”

“And should the Trump administration further obstruct Chinese investments in the U.S., even tougher measures such as restrictions on imports of U.S. services and similar investment reviews would likely be on the table,” it said.

Separately, Hong Kong’s South China Morning Post reported on Thursday that U.S. and Chinese officials had been holding talks to shield American soybeans and other agricultural products from trade sanctions.

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ANZ Bank to suspend retail asset finance business

ANZ Bank will suspend its retail asset finance business from the end of next month while it undertakes a review, affecting new loans for cars, boats and caravans.

“ANZ will continue to service its existing consumer asset finance customers and will continue to provide customers with access to personal loans during the suspension,” the bank said in a statement on Friday.

ANZ’s asset finance product for commercial customers is not affected.

The move comes amid the first round of hearings for the royal commission into financial services which is looking at case studies covering areas including home loans, car loans, credit cards, add-on insurance, credit offers and account administration.

Car loans will be a key focus, with the commission hearing from customers about ANZ and its former subsidiary Esanda’s car finance practices, and Westpac and St George’s finance practices. ANZ was hit with a $5 million fine earlier this year over the car lending practices at Esanda.

The suspension of new loans is effective from April 30 and the review is expected to be completed by September 30.

ANZ’s managing director of retail distribution, Catriona Noble, attributed the review to “the increased technology costs required to effectively compete in the secured consumer asset finance market”.

“Our secured consumer asset finance product represents less than 1 per cent of revenue within our broader Australian business, so we need to assess if it is better for our customers, shareholders and employees if we focus our investment on areas of our business that are core to what we do,” Ms Noble said in a statement.

“Providing asset finance solutions for commercial customers remains a core business for ANZ and we will also continue to service existing retail customers for the duration of their loans.”

Moore PHOTO

94% of SMEs say the Government is ignoring their concerns about Brexit

Just 6 per cent of small and medium-sized businesses say that the Government is listening to their concerns about Brexit.

Of 653 businesses polled by accountancy firm Moore Stephens, 612 said they felt their views on Brexit were being ignored.

Moore Stephens said that this highlights just how much work the Government must do to convince the SME community that the deal to exit the European Union protects the interests of UK businesses.

More than half of owner-managed businesses also said that their single biggest concern for 2018 was how Brexit negotiations will affect them – far ahead of other issues such as skills shortages (41 per cent), cyber attacks (29 per cent) and increased regulation (28 per cent).

When asked about their specific Brexit-related worries, 38 per cent of businesses said that the introduction of trade tariffs was their biggest concern, 30 per cent fear a loss of EU labour, while 23 per cent are concerned about loss of European customers. Only 33 per cent said that they had no concerns around Brexit.

“Whilst banks and other big businesses have the influence to lobby the Government for their own special Brexit clauses, there are concerns that small businesses will be forgotten about,” said Mark Lamb, a partner at Moore Stephens.

“Business owners are hugely concerned about what Brexit might mean for them. The Government must take their needs seriously when negotiating the exit deal.

“Brexit could potentially impact on an enormous number of issues affecting owner-managed businesses in the UK, from import and export costs, to access to labour, and grants and subsidies. Businesses have been given very little clarity so far on what effect Brexit might have on any of these issues.

“Businesses thrive on certainty – it allows them to invest, scale up, take on more orders and expand their workforces. If the Government does not give them clear indications of what they can expect once the UK has left the European Union, it will be very difficult for many of them to invest in their growth.”